In response to questions from lawmakers, acting White House budget director Jeff Zients testified to Congress in March the individual mandate fine in President Obama’s health care law is not a tax, an admission which contradicted the claims the administration made before the U.S. Supreme Court.

According to Galen Institute President Grace-Marie Turner, this is a sign the argument the Department of Justice is making before the Supreme Court is purely a delaying tactic designed to prevent the Court from hearing the case until the mandate is enforced in 2014.

“The Obama administration’s lawyers argued at least 14 times during federal court hearings on ObamaCare that the mandate was a tax. U.S. District Judge Roger Vinson said that they cannot now claim it is a tax while claiming during the debate over the bill that it was not a tax,” Turner said. “Administration officials are being completely disingenuous about this question—showing that the truth is whatever suits them at the moment.”

Penalty or Tax?

According to Jonathan Ingram, an attorney and health policy analyst at the Illinois Policy Institute, “Congress went out of its way to call this fine a penalty, not a tax.”

“When they imposed new excise taxes on Cadillac health plans and tanning services, they called them that. The Senate actually rejected the language in the original House bill that called it a tax,” Ingram said. ”The Supreme Court has been clear that it won't give magic to the word ‘tax’. If the purpose is to regulate conduct, it's a penalty and outside the scope of federal taxing power. Penalties are only constitutional when the underlying regulations are themselves constitutional. To date, no federal court has accepted the administration's taxing power argument.”

St. Louis constitutional attorney Susan Herold noted that while there may be little practical difference between a penalty and a tax from an individual citizen’s perspective, there are important legal distinctions.

“From a practical standpoint, there is little difference between a penalty and a tax. If the choice you are given is to purchase a product or pay a fine, there really is little choice, other than determining which will cost you less. Legally speaking, however, there is,” Herold said. “A tax generally is designed to raise revenue, whereas a penalty is designed to penalize one for violating a law. The administration is characterizing it as a tax so as to contend it falls within the taxing power of the Constitution.”

Ingram agrees, noting President Obama repeatedly denied the mandate was a tax in interviews during the debate over his health care law.

“Taxes are levied for the primary purpose of raising revenues, while penalties are levied to regulate conduct,” Ingram said.

Arguing Both Ways

The Constitution provides for the taxing power in Article I, Section 8, which states, “The Congress shall have Power To lay and collect Taxes … to pay the Debts and provide for the … general Welfare of the United States.”

Herold says the individual mandate does not qualify under this clause, and the courts have to this point agreed with her.

“The 6th and 11th Circuit Court of Appeals have both held that the individual mandate is not a tax,” Herold said.

In U.S. District Court Judge Roger Vinson’s opinion on the case brought by 26 states, currently awaiting hearings before the Supreme Court, the judge specifically rejected the argument the mandate is a tax, noting “there is absolutely no support for that statement in the statute itself.”

“[The health care law] lists seventeen ‘Revenue Offset Provisions’… [and] further includes a section entitled ‘Provisions Relating to Revenue.’ … However, the individual mandate penalty is not listed anywhere in them,” Vinson wrote in his decision.

Herold said the budget director’s response was clearly due to a lack of team discipline.

“The administration is arguing that it is a tax to judges, but that it is not a tax to congressional members,” Herold said. “My suspicion is that Zients simply botched the response. It is interesting that he wasn’t adequately prepped for the question.”